"Summer of Love" and "Summer of George" are two well-known songs, and currently the US stock market is singing "Summer of AI".

Up until now this year, it has risen by 15%, although investors have reason to be cautious - or to consider that it's impossible for the S&P 500 Index's double-digit growth to continue indefinitely - investors should anticipate that this upward trend will at least temporarily halt - as this does not mean that a "reckoning" is imminent. $S&P 500 Index (.SPX.US)$ Founder of Trivariate Research, Adam Parker, put forth three reasons why the US stock market can keep going up.

First, the US's financial environment is relatively relaxed. While the scale of bank loans may not be as large and regional banks have always been a pain point, Parker says that a large amount of private credit offsets the impact of these two factors. In fact, in the past 35 years, Bloomberg's Financial Conditions Index has only been more relaxed than it is currently 8% of the time.

The expansion of corporate profit margins is another bullish factor for the US stock market this round. Analysts predict that, driven by factors such as improved labor productivity, declining input costs, and maintaining high prices, the profit margins of nearly three-quarters of the top 500 companies in the US will rise.

This was reflected in the first quarter, where the net profit margins of eight out of the 11 S&P 500 Index sectors increased year-on-year. As Nicholas Colas of DataTrek said, "The ability of technology companies to boost the fundamentals of the index is not the only theme, an increase in profit margins is a larger one."

Of course, without mentioning large technology companies and artificial intelligence (AI), the discussion about the rise in the US stock market is not complete. Parker said that the "dream of AI" is the third pillar supporting the continued growth of the US stock market.

At present, it's still difficult to accurately determine which companies will be the winners in AI, as well as to understand how much AI will change corporate productivity, but Parker said, "The dream of achieving revenue growth without any net hiring is so strong that the stock market continued to rise despite what might have been regarded as worrying news in the past. Compared to the beginning of this year, investors believe that the probability of corporate profit growth under AI is greater in the long run."

Just the prospects of AI are enough to drive the US stock market higher, Parker said, adding that along with the aforementioned two factors, the market's growth is not in danger. Should catalysts such as a tightening of the financial environment or a deterioration in the US economy occur, or if the July job report and the upcoming Q2 earnings season show worrying signs, then this situation could change.

Parker believes that the most likely scenario is that "in the short term, when talking about the potential of AI, the stock market will be in a 'guilty until proven innocent' mode."

Therefore, even if the AI market looks a little expensive, investors should not avoid it, and forgo the ETF, which could put them in danger, as concerns about the concentration of the stock market have been misguided. Parker said, "Who would want to manage a fund in the coming years and say that they missed such a critical trend? We don't want to see this happen."

Nic Colas of DataTrek emphasizes that compared to other tech-heavy bets, the S&P 500 Index is a less volatile bet on potential winners and losers in the AI sector. While Colas is a "believer" in large tech companies - "the new generation of AI is a powerful new technology, and the largest players have the best opportunity to develop and monetize it" - he says that the argument that "new technology will often produce new winners and losers" can also be used in this case.$Microsoft (MSFT.US)$, $NVIDIA (NVDA.US)$ and $Apple (AAPL.US)$ If that's the case, then the S&P 500 Index is a less volatile investment than actively managing a portfolio of AI stocks. The weights of the seven tech giants - Facebook, Apple, Amazon, Netflix, Google, Apple, Microsoft, Nvidia - and banks, other companies, ETFs, and funds owned by this ETF are all approaching 50%.

$NASDAQ 100 Index (.NDX.US)$era of$Invesco QQQ Trust (QQQ.US)$ $Alphabet-A (GOOGL.US)$, $Amazon (AMZN.US)$ $Meta Platforms (META.US)$ $Tesla (TSLA.US)$ $Broadcom (AVGO.US)$

By investing in the s&p 500 index, investors will benefit from the stocks that continue to support the index's rise, and if the index continues to rise, it may attract more passive investment funds.

Ultimately, investors can see that the party is not over without having to believe that the party will continue indefinitely.

Edited by Jeffrey